Copper Mining in Chile

With a natural landscape rich in mineral resources,  it’s no surprise that copper mining in Chile is one of the country’s largest industries. As the top copper-producing country in the world, the South American nation’s name is synonymous with the red metal.

Chile’s copper production is mostly based in the northern region of the country, and comes primarily from iron-oxide-copper-gold (IOCG) deposits, porphyry copper deposits that are rich in molybdenum and gold and silver by-products.

Despite disruptive weather, strikes and, of course, COVID-19-related slowdowns at key mines, Chile was still able to produce an impressive 5.7 million tonnes of copper in 2020. Meanwhile, the country’s copper reserves stand at 200 million tonnes. What else should investors know about copper mining in Chile?

World-class mines and exploration targets

Chile has long been a king maker when it comes to major copper producers.

Major mining companies Antofagasta Minerals (LSE:ANTO), BHP (ASX:BHP,NYSE:BHP,LSE:BHP), Freeport-McMoran (NYSE:FCX), Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO) and Albemarle (NYSE:ALB) have undertaken significant exploration and production in the region for decades.

The world’s largest copper-producing company is Chile’s Codelco, which produced 1.73 million tonnes of copper in 2020. The state-owned copper miner operates two of the world’s most impressive copper mines: the El Teniente project, the world’s largest underground copper mine; and Chuquicamata, the second deepest copper mine in the world as well as one of the largest open-pit mines.

British multinational Antofagasta has a significant footprint in Chile, with four operating mines in the country, including its flagship Los Pelambres in the Coquimbo region of Central Chile.

A few other of the world’s largest copper mines with Chilean addresses include Escondida, owned by BHP, Rio Tinto and a Japanese consortium headed by Mitsubishi (TSE:8058), and the Collahuasi mine, jointly owned by Anglo American (LSE:AAL), Glencore (LSE:GLEN) and Mitsui (TSE:8031).

Chile is also the top jurisdiction in the world for IOCG deposits, which rank alongside porphyry deposits as some of the world’s largest deposits and most consistent in grade. The country’s prolific Atacama IOCG belt is home to the Candelaria mining complex, which is owned by Lundin Mining (TSX:LUN,OTC Pink:LUNMF) and Sumitomo (OTC Pink:SSUMF,TSE:8053).

In the midst of rising copper prices and predictions of stuttering mine supply growth in the market, Chile is still considered a primary target for exploration. The country expects US$74 million in mining-related investment over the course of the next decade, with 90 percent of that dedicated to copper projects.

Aside from the major players mentioned above, a number of junior resource companies have copper exploration and development-stage projects in Chile, including:

• Bastion Minerals (ASX:BMO) holds three early stage exploration projects within the Atacama region of Chile, including the Cometa and Capote projects — both highly prospective for IOCG-type mineralization — and the Garin project, which has the potential to host epithermal silver-lead-gold mineralization and porphyry copper mineralization.

• Chilean Metals Exploration’s (TSXV:CMX,OTCQB:CMETF) project portfolio includes the Tierra de Oro and Zulema projects, which are located within the Atacama IOCG belt. Zulema is located just 30 kilometers from the Candelaria deposit.

• Golden Arrow Resources (TSXV:GRG,OTCQB:GARWF) is exploring for copper in the Atacama region at its Rosales project, which has several priority target areas, including on the Margarita trend that continues from the adjacent operating Margarita mine.

• Hot Chili (ASX:HCH,OTCQB:HHLKF) is growing the resource at its Cortadera copper-gold project, where it claims to have unearthed “six of the best copper-gold porphyry drill results in the world.”

• Los Andes Copper (TSXV:LA) is developing its wholly owned Vizcachitas copper-molybdenum deposit, considered one of the largest advanced copper deposits in South America.

Chile’s highly supportive government

The Chilean government understands the strategic importance of the mining industry to the country’s economic health. In 2019, the mining sector contributed US$283 billion to the country’s GDP, representing approximately 10 percent of its total GDP and over half of the country’s total exports.

Chile is one of the top three most favorable jurisdictions in the Latin American region, according to the Fraser Institute’s Annual Survey of Mining Companies. The nation has a long history of strong mining laws and is mining friendly, especially to foreign companies.

Chile’s popularity as a sophisticated mining region is tied to a number of factors that make it a positive and profitable environment for mining companies. Chile’s high-quality copper reserves are located in regions of the country supported by energy infrastructure, transportation networks and several goods and services providers. The country is also rich in skilled labor and is home to a number of mining specialists with deep knowledge of the industry.

Regulated by both domestic and international bodies, Chile prides itself on having a long history of stable legal frameworks that support both the government and resource companies, protecting miners from corruption and questionable transactions that might disrupt projects in other jurisdictions.

Overall, Chile is a mining-friendly jurisdiction that has put a lot of effort into developing the industry and maintaining a high standard for copper production globally.

What’s next for copper mining in Chile?

Due to its abundant copper resources, Chile is still considered a primary location in which to conduct copper exploration, and this is proven by the aforementioned US$74 million to be invested in the mining sector over the next decade. However, there is concern that declining ore grades may require copper companies to look for ways to mine and process copper ore more efficiently.

Commenting on that topic, the US International Trade Administration (ITA) reported that “Chile is seeking innovative technologies to modernize productivity and extraction in its mines, a trend that has been accelerated by the COVID-19 pandemic.”

Chile’s Mining Council has developed a 15 year plan to help mining companies deploy new technologies for improving operational efficiencies and sustainability. Codelco and Antofagasta are already employing emerging technologies such as internet of things and machine learning to improve efficiencies.

The ITA also points out that “Chile’s copper mining project pipeline remains attractive” — as a result, even with the country’s long mining history, further discoveries are likely to emerge in Chile with the use of more modern subsurface exploration techniques, spurring further production in some of the already established mining jurisdictions in the country.

This is an updated version of an article originally published by the Investing News Network in 2018.

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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Chilean Metals Exploration and Los Andes Copper are clients of the Investing News Network. This article is not paid-for content.